Thursday, April 27, 2006

cost comparison and price of oil ...

The cost of drilling Saudi oil in 2003 was around $1.5/barrel ... approximately four times below the world average. (sorry... no figures for today)

The cost of extracting the oil out of Canada's oil sands is around $20/barrel (key variable: cost of natural gas, which is key ingredient in extraction process).

At $70 per barrel, it is no wonder corporations such as Exxon Mobil are setting record profits, Gulfies have no idea what to do with their money, and Iran is so damn cocky!!!

5 comments:

ghassan said...

The only meaningful and objective measure of profitability is an examination of the margins. By that measure integrated oil is not even close to the top.

Raja said...

integrated oil not even close to the top?

What exactly do you mean by integrated oil? oil sands and similar stuff?

and when you say "close to the top" do you mean profitability?

hummbumm said...

integrated oil are the large oil companies that do E&P as well as refining and marketing. I believe Ghassan is saying that their margins are actually low when compared to software or pharmaceutical companies. XOM's return on average capital employed (ROCE) is over 30% recently which is no small potatoes though! XOM is of course much more efficient than the national oil companies, though their extraction costs are lower.

ghassan said...

Raja, as hummbumm stated correctly integrated oil has lower margins than software and pharmaceuticals.

Raja said...

thanks for the clarification guys.